Just because your kids are on summer break doesn’t mean their college savings has to be as well. For many, summers are filled with carpooling to baseball games, backyard BBQs and trips to the pool. Let your kids enjoy their time away from the classroom while continuing to bolster their college savings.
• If you haven’t done so already, consider using an automatic investment plan (AIP). Saving with AIP allows you to set up automatic contributions on a regular basis by connecting your financial institution account to your 529 plan. This allows you to make saving a part of your routine without taking time out of your day each month. If you already use AIP, consider increasing the amount you contribute. Even a few extra dollars a month could mean big savings when it comes time to write that first college check. You and your kids may be taking a break this summer, but your account will not!
• Visit the College Savings Plans Network college cost calculator to ensure you are still on track to meet your savings goals. The calculator allows you to select the student’s current age, the type of school they are interested in attending and the college cost inflation rate (the average national tuition inflation has been between 6-7%). If you find you are not on track to save as much as you had planned, now is a great time to make adjustments.
• If you are investing in individual portfolios instead of an age-based option, take a look at the way your money is currently invested. Do you have the right mix of investments? If not, do you need to make changes to realign with your target goals? If so, consider changing your asset allocation. Exchange your money from one option to another – IRS regulations allow you to make two exchanges per year – or you could direct your new contributions into just one portfolio until your goal looks back on track. Once you have rebalanced, you are done; at least until next year!
• Talk about your 529 plan more! When you are getting together with friends and family this summer, be sure to mention the benefits of your 529 plan. Encourage them to open a 529 account for their own children or to give holiday and birthday gifts in the form of a 529 plan or even a contribution.
By investing in your children’s education, you are investing in their future. I encourage you to make time and evaluate your college savings strategies, because just like this summer, the time to save for those expenses will be over before you know it!
About the Author: Iowa State Treasurer Michael L. Fitzgerald is the Past Chair of the College Savings Plans Network and the administrator of Iowa’s 529 College Savings Programs including College Savings Iowa, with more than $4.2 billion invested.